Business loans can provide the money you need to purchase inventory or equipment for business expansion, finance business expansion pay employees and cover other expenses. Before you apply, make sure you understand how these loans work and what kind of documentation you’ll have to provide to your lender. Be aware of the length of time required to complete an application and any fees due.
Common uses for business loans
A business loan can be used to pay for unexpected expenses, such as the damage to your office chair or the COVID-19 pandemic. In addition, you may require financing to cover an unexpected capital expenditure, like upgrading or replacing technology, purchasing manufacturing equipment or remodeling a retail store. Some lenders offer lines of credit that let you draw funding according to your needs, with a set maximum and interest only charged on the amount you use.
The application process and eligibility requirements
In order to be eligible for a loan, you’ll need to provide specific information about your company, including the official name of the business along with the tax ID number and financial documentation. This could include business plans such as proposals, profits and loss statements, and the names and Social Security https://southbeachcapitaladvance.com/how-do-student-credit-cards-work Numbers of those who own 20-25 percent or more of your company. Some lenders require that you have been in business for at least one year, while some are open to startups or do not have any time-in business requirements.
A mentor or advisor can guide you through the process of obtaining a business loan. The organizations like SCORE have a network of volunteer business mentors who offer free or minimally-cost guidance for startups and small business founders. You can search for local chapters and connect with an advisor in person.